Debating the death of capitalism

I took part last Friday in a debate at Durham University Union on the motion that "This house welcomes the death of capitalism." I opposed it, of course, arguing that capitalism has not died, is not dying, and probably will not die. I argued that two of its central elements went with the grain of human nature: investment and exchange. I suggested humorously that the first caveman who fashioned a bone hook invested time he could have spent happily hunting mastodons in order to gain greater rewards in future. This is like the child who chooses two chocolates tomorrow rather than a single chocolate today, or the investor who forgoes the pleasures that spending £100 might bring in order to have £105 to spend next year. Investment is one way in which people better their lot. Another, I said, was exchange. When the caveman swaps one of his bone hooks for a fur offered by a hunter, both gain something they value more in exchange for something they value less. Each gains value and wealth is created. It was these two elements, I remarked, that had enabled capitalism to generate unparalleled wealth for humanity, the wealth that has lifted billions out of starvation and subsistence, and has paid for medicine and sanitation, the arts and education. It has doubled life expectancy within a century, and has meant that far fewer children die in infancy, or mothers in childbirth. Capitalism survives because of what it enables us to achieve.

I dealt with two things that capitalism is not. The first is cronyism, where big business gets into bed with government to secure special measures that enable it to exploit the public instead of competing fairly for their custom. The second is fraud, where bankers illegally fiddle interest rates, where Enron swindles its shareholders out of billions, or where Bernie Maddoff steals from his clients. This is not capitalism; it is criminality, and both of these practices need vigilance to thwart them.

People have asked "What will come after capitalism?" I replied, "Capitalism," pointing out that after each crisis it is modified so the same mistakes are not repeated. It evolves and learns, as humans themselves do. We should not applaud its death, I said, but celebrate its continued life.

The students came down on the side of capitalism by defeating the motion.

There is no such thing as pensions tax relief

Once again we've the sight of a politician not grasping reality when planning a raid on other peoples' money:

Ms Reeves said: “It cannot be right that those on high incomes paying 40 per cent tax only have to save £600 to generate £1,000-worth of pension savings, while those on middle and low incomes have to save £800 to generate the same amount.”

“Replacing tax relief with matched contributions, or a system that was even more progressive, offering higher relief to those on lower incomes than those on higher incomes, should be explored.

“At present, the pensions tax relief rewards those who already have the highest savings and can most afford to save.

“This seems to be a very inefficient use of the £20bn spent on pensions tax relief and is in urgent need of attention.”

There is no such thing as pensions tax relief. There is however something that is pensions tax deferral.

Tax relief would be that you do not pay tax on money put into a pension and also do not pay tax on the pension when it is received. You are relieved from taxes that is. This is not what happens. Instead, you do not pay tax on the money put into a pension: but you do pay the normal income tax on the pension once it arrives. This is not tax relief: this is tax deferral.

Two points flow from this. The first is that we've actually got to call this what it is: it's delaying what tax is paid, not abolishing it. The second is that the costs of this are nothing like what the claim is. Because we do indeed collect income tax upon pensions. And whatever that amount is must be offset against whatever amount anyone wants to claim is deferred. The net amount could go either way, we simply don't know.

Incomes in retirement are usually lower than during a working life and so the tax collected might be less than that deferred as a result of lower tax rates. Or, perhaps, the investment pot has grown so that the income tax collected in the, say, 20 years of retirement is greater than the tax deferral granted in the 40 years of working. We simply do not know the answer there (maybe someone does, but we do not). But until we do know that we cannot have any clue at all about whether tax deferral actually leads to a loss of Treasury revenue or not. It will affect the timing, obviously, but the amount?

What is being done here is to look only at the cost of the deferral upon revenue and to ignore the income that results from said deferral. And if this is the way that we're going to discuss public policy then God Help Us All.

Are benefits a subsidy to workers or employers? Yes

There's an interesting claim out there that benefits are just a subsidy to low wage employers. They can get away with paying low wages because we taxpayers then top that up. Alternatively, we might think of benefits as being subsidies to those people who, for whatever reason, have incomes lower than we think they ought to be. There's an answer to which of these is true, that answer being: yes. Jeremy Warner is one this subject here:

Much the same process is evident today in the growth of Britain’s low-wage, low-productivity economy. There is little incentive for employers to improve their productivity, and therefore their wage levels, when labour is subsidised to the degree it now is from general taxation.

By the by, the tax credit system – enormously expanded and enhanced under Gordon Brown – has created a kind of client state of those partially or entirely dependent on the government for their way of life. It has locked in votes as well as disrupted the normal market process by which the general standard of living is raised.

We would make a slightly different point. Whether benefits subsidises the employer or the employee depends upon which benefit. More specifically, a benefit that is paid because of low income, regardless of whether someone is in or out of work, is a subsidy to the recipient. And it's also an anti-subsidy to the potential employer. It raises the reservation wage (the amount that must be offered to get someone to come into work). However, a benefit that is paid conditional upon being in work will end up as being a subsidy to that employer: for it lowers again that reservation wage.

Here in the UK we really only have one major work conditional benefit, working tax credits. Those really are a subsidy to low wage employers. The impact of the rest of the benefit system is to raise wages.

The interesting out come of this is that if you want wages for the low paid to rise then you should almost certainly be arguing for the abolition of working tax credits. Not that this would increase the incomes of the poor but it would stop that subsidy of low wage employers.

America's only socialist opposes Americans trading with socialists

Bernie Sanders running for President was always going to provide some amusement. But we didn't think it was going to come quite so soon after America's only declared socialist in Congress made his announcement. Sanders is against eh idea that America should sign the trade deals that Obama is urging that America does. And as Tyler Cowen has pointed out the country most likely to benefit from said trade deals is the at least nominally (and very poor, there's a connection there) socialist country of Vietnam. It's thus possible to note that:

Note his position the the US needs to “fundamentally change our trade policies, so that corporations don’t shut down in this country and move to China or Vietnam or other low-wage countries.”

Yes, the socialist candidate for US president is talking about keeping American jobs from migrating to the “socialist” countries of China and Vietnam.

Politics: it's a rum manner of trying to run the world, isn't it?

We would also like to note that this blog post was created on International Workers Day, May 1.

Comparing apples to apples: NHS still ranks below average

Most healthcare reporting is deeply biased. From blogs to papers to policy, most people have strong preferences for different kinds of healthcare systems that they believe to be ‘the best’, often based on what they view the role of the state to be. Obviously some beliefs are grounded in more facts and stats than others, but given how complicated healthcare systems are, it’s possible to come up with all different kinds of conclusions that appear, at least on the surface, like they’re grounded in fact. Compare, for example, The Commonwealth Fund 2014 report to the 2014 European Health Consumer Index: two studies that compare international healthcare systems. Both published within one year of each other, The Commonwealth Fund ranked the NHS the best healthcare system out of 11 countries, while the EHCI threw it down the list, ranking it 14th after all your obvious competitors, including The Netherlands, Switzerland, Germany, but also after your less obvious contenders, like Portugal.

Both reports appear to be thoroughly researched and have lots of numbers to back them up. So who do you believe? Well, if you favour single-payer health systems, you're probably going favour the Commonwealth Fund's report, which inherently favours centralised systems. (For example: out-of-pocket costs and insurer rejection of full cost reimbursement were considered a black mark against a healthcare system, regardless of access to treatment.) If you rank results higher than the principles around who delivers healthcare or who makes a profit, you're probably going to favour the EHCI's report, that gives more weight to things like waiting lists.

I personally give more credit to the EHCI report because my primary concern when it comes to healthcare systems is patient outcomes. That’s my bias.

Which is why the OECD’s healthcare efficiency reports are so important. The OECD’s stance is that “there is no “one-size-fits-all” approach to reforming health care systems. Policymakers should aim for coherence in policy settings by adopting best practices from the many different health care systems that exist in the OECD and tailor them to suit actual circumstances.” So while the OECD does make some comparisons of countries across the board, it also intentionally group countries together based on different kinds of healthcare systems in order to compare like with like.

Specifically, they break countries down into six groups to compare the efficiencies of similar healthcare institutions to each other, in an attempt to identify where the most improvement can be made within specific systems:

The UK falls into Group 6, which is characterised as:

Mostly public insurance. Health care is mainly provided by a heavily regulated public system, with strict gate-keeping, little decentralisation and a tight spending limit imposed via the budget process

Seven countries fall into this category: Hungary, Ireland, Italy, New Zealand, Norway, Poland, and the UK. The OECD uses nifty radar charts (click on links) to illustrate how each country compares to both the OECD average as well as Group 6’s average in different areas including efficiency and quality, amenable mortality, prices, resources, consumption, financing and policy. The final chart ranks each country’s to measure its comparative efficiency. The results:

High DEA Score: Norway, Italy Above Average: Poland Average: New Zealand Below Average: UK Low: Hungary, Ireland

The OECD’s analysis: “The quantity and quality of health care services (in the UK) remain lower than the OECD average while compensation levels are higher. Reinforcing competitive pressures on providers could help mitigate price pressures, e.g. by increasing user choice further and reforming compensation systems.”

On Tuesday I noted that the UK is one of the OECD countries that could do the most to improve its efficiency in public healthcare spending . But breaking that down even further, the UK doesn’t come close to topping the charts in its own group.

Perhaps the UK should be looking to make improvements to resemble Norway, which tops the ranks for public health services. Or maybe it should be looking towards other categories that focus on social insurance systems. Either way, it's time for the UK to start looking beyond the NHS.

LFTRs: The Future of Green Nuclear?

The nuclear industry is abuzz with talk of an avant-garde next-generation nuclear concept, pundits are chattering and governments are starting to show interest; advocacy for thorium is gaining traction and LFTRs are stealing the show. Some, such as fervid thorium exponent Kirk Sorensen, are proclaiming this technology to be the innovation that revolutionises our approach to energy and invigorates our fight against climate change.[i] So, what is thorium? Naturally-occurring and frequently accommodated in amalgams of rare-earth metals, thorium is typically present in the single isotopic form Thorium-232.[ii] It was uncovered in 1828 by Swedish chemist Jons Jakob Berzelius, who, rather imaginatively, named it after the Norse God of Thunder, Thor. Experimentation into the utility of thorium as a nuclear fuel has been relatively unsystematic and underfunded over the past 60 years. Noteworthy examples include investigation into the efficacy of thorium based fuels in Pressurised Heavy Water Reactor 'Candu' units at Canada's AECL Chalk River Laboratories; designs for a thorium fuelled Advanced Heavy Water Reactor in India — construction of which is envisaged for 2022 — and the intermittent operation of a High-Temperature Gas-Cooled 'Dragon' Reactor in the UK, between 1964 and 1973, for a total of 741 full power days. However, it is a series of projects conducted throughout the 1960s at the Oak Ridge National Laboratory in the USA that appeal most strongly to the contemporary imagination.[iii]

The ORNL erected a 7.4 megawatt — a megawatt is equivalent to 1 million watts — prototype Molten Salt Reactor, utilising U-233 as its principal fissile driver; Molten Salt Reactors that utilise fissile thorium are known as Liquid Fluoride Thorium Reactors (pronounced 'lifter' in acronymic form, LFTRs are the most exciting thorium concept and as such shall be the focus of this essay). To elucidate the basic mechanics, LFTRs are bifurcated into two compartments: the reactor core and surrounding thorium 'blanket'. Within the core, isotopic uranium U-233 fissions to expel neutrons, which then exit the core and fuse with fissile Th-233 in the 'blanket'. The fusion with neutrons results in Th-233 transmuting to U-233, which is then transported into the core and fissions to propagate the process — LFTRs 'breed' fuel because of the neutron-dependent transmutation that occurs.

The technical superiority of LFTRs, relative to conventional nuclear, is conferred by numerous structural refinements. Amongst these, automatic temperature regulation nullifies any requisite for control rods or an active cooling system, as in conventional reactors. To be precise: the molten salt is expanded by heat generated through fission in the core, thus retarding the rate of fission. Conversely, if more power is demanded from the reactor, more heat energy is extricated from the saline and the returning cooler salt augments the rate of fission. Overheating is only conceivable if the flow of molten salt is disrupted and heat energy is agglomerated in the core; yet even this hypothetical is liable to a self-checking mechanism: surfeit heat will melt a solid salt freeze plug, allowing the liquid fuel to safely decant into a drain tank.

The reactor is sustained at atmospheric pressure throughout operation; fluoride salts boil at approximately 1400°C, so needn't be pressurised to retain their liquid state. In a conventional Light Water Reactor, water undergoes intense pressurisation to inhibit extrication into a gaseous state — a consequence of which is the requisite to construct highly pressurised containment facilities. LFTRs obviate this bloated hindrance: reducing size, danger and enhancing aesthetics. The fuel in a Molten Salt Reactor is, obviously, molten, so cannot melt-down in the same way that solid fuel in a LWR can. In the rare eventuality that a LFTR is the object of military/terrorist hostility, the liquid fuel would only contaminate the immediate vicinity, leaving the environment largely unscathed. The products of fission would remain in the saline as stable fluorides, and the construction of a rudimentary protective encampment around the plant would inhibit soil leaching.[iv]

LFTRs can be compact, permitting effective operation in inaccessible locations (country towns, military bases, research camps etc). It's even possible to construct Small Modular Reactors at a central site and then assemble them at the desired location — or, to amalgamate them into a more potent productive unit. Unlike conventional LWRs, LFTRs do not require water to be supplied throughout operation, thus negating the requisite for supplementary infrastructure. As such, it becomes viable to locate them in more densely populated areas. Conventional nuclear produces large quantities of radioactive waste, but LFTRs allow you to siphon-off waste products and reprocess transuranics — all the thorium can be fissioned.[v] Although it's true that LFTRs produce radioactive fission products, only 17% of these have long half-lives — approximately 300 years — and LFTRs are spectacularly more efficient than LWRs: utilising 98% of fuel rather than the traditional 2%. Not even the waste products go to waste, because they accommodate a wealth of valuable industrial compounds. Plutonium is not produced, making it exceptionally challenging to construct nuclear weapons. Even superfluous heat energy needn't go to waste: if redirected, it can feed industrial processes like water desalinisation and hydrogen production.[vi]

The structural superiority of the LFTR is compounded by diverse economic advantages. Thorium is three times more abundant in the Earth's crust than uranium, with the largest known deposits in Australia, India, Norway and the USA. Remarkably, the energy in 5000 tons of Thorium would satiate world energy demand for an entire year — and there are 44 million tons of Thorium in the world! A LFTR produces the same quantity of energy from 1 ton of thorium as a LWR does from 250 tons of uranium; and LFTRs, being substantially safer than conventional nuclear, would be capable of jettisoning much of the burdensome regulatory stipulations imposed upon contemporary plants.[vii] According to www.thorium.tv: 'you might be able to go as low as $220 million or below, if 80% of reactor costs truly are attributable to expensive anti-meltdown measures'. By ameliorating the often painful start-up costs, LFTRs could act as a beacon for international capital, allowing for the rapid establishment of a multitude of plants and swift absorption of market share.

Following commercialisation, annual operating costs would nosedive, further incentivising ownership and construction: 'Current operating costs, ignoring fuel costs, for a 1-gigawatt plant are about $50 million/year. With greater automation and simplicity in Generation IV plants, in addition to more reasonable safety and security regulations, this cost will be decreased to $5 million/year' — even fuel will be cheaper: 'Fuelling a 1-gigawatt uranium plant today costs $30 million/year. Fuelling a 1-gigawatt thorium plant will cost only $1 million/year'. Plant ownership would be highly proficuous, and energy consumption more affordable: 'over a 60-year operating lifetime, both plants produce 60 gigawatt-years of power. The total cost for the uranium plant is $4.9 billion, at a rate of $81.6 million per gigawatt-year. The total cost for the thorium plant is $490 million, at a rate of $8.16 million per gigawatt-year. Thorium power makes nuclear power ten times cheaper than it used to be, right off the bat'. Unfettered by the requisite for water transferral and protective encasement, and with fewer transuranic disposal costs, LFTRs are highly economical.[viii]

Besides the aforementioned benefits, the greatest potential of LFTRs lies in the low-emission sourcing of energy. We need to be pragmatic about the transition to clean energy: renewable is promising but inchoate, and nuclear has the industrial horsepower to effect serious change.

With public support and private ingenuity, the 35% of British energy provided by nuclear and renewable could usurp the 37% share of oil, and eventually the remaining third of market share held by natural gas.[ix] Yet, it's important not to become myopic in focusing exclusively on hypothetical environmental benefits, for this risks overshadowing broader implications. Much global conflict is fought over finite energy resources, so, it's imaginable that a superabundance of affordable and sustainable energy would precipitate an age of heightened stability, energy independence and national security — there would be less war and more prosperity. The inextricable correlation between abundant energy and higher living standards means that a stable energy supply is a requisite of future economic growth; modernisation on this scale would widely extend the reach of capitalism in raising people from perdition in the depths of penury. On a symbolic level, it would transform our relationship with the planet, heralding a shift towards a more symbiotic future.

It might strike you as being rather bizarre that governments are only just apperceiving the benefits of green nuclear, but a miserable, stultifying confection of radiophobic media bias, wincingly high research costs and Big Nuclear's vested discouragement — LFTRs would render all exorbitantly pricey uranium plants — in which corporations have large sunk costs — superannuated and obsolete — have made investment impolitic until now. Despite all this, we probably would have had functioning MSRs operating around the world by now if the Nixon Administration hadn't jettisoned the thorium project at ORNL in the 1960s; ironically, it was one of the benefits of thorium, the conspicuous absence of plutonium production, that the administration perceived to be a weakness — the DoD was seeking to use nuclear power to foster its domestic nuclear armaments programme.[x] Political expediency has since resigned any aspiration of resuscitating the research programme to destitution in the graveyard that is the government archives. Only in the USA — and more recently China — have government research budgets had the available funds to finance a serious thorium research programme; so, to put it simply, no one has been willing to foot the bill — it's a classic case of short-terminism triumphing over prudence. What about private firms? Only established energy companies would be able to raise the capital, and every energy company interested in nuclear is already a stakeholder in conventional uranium reactors[xi]: what's the point of sinking money into research for a decade, only to have the eventual conclusion of that research invalidate your principal market assets? Energy companies need to sell the nuclear energy produced — technically converted from chemical to electrical energy, 'produced' may invoke the erroneous notion of energy being generated ex nihilo — by current reactors to justify the massive capital costs associated with establishing those reactors: for firms with a vested interest in conventional nuclear the development of thorium is unneeded and may actually pose an existential threat to their market share (smaller firms have tried, but the fiscal horsepower is lacking). Disparate incidents — Castle Bravo, Chernobyl and Fukushima being the most memorable — have caused the public and media to perceive nuclear with gratuitous cynicism. Less than 40% of people in the UK and US are supportive of nuclear power — in countries like Germany that dips as low as 7% — and this is as much the product of sensationalist journalism as it is general ignorance.[xii] Contrary to popular belief, nuclear power actually obviated an average of over 1.8 million net deaths worldwide between 1971-2009, due to the preclusion of burning fossil fuels to supply this energy and the decreased air pollution and green house gas emissions that ensued[xiii] (that's just conventional nuclear, imagine what thorium would do). A sad series of unfortunate coincidences have culminated to relegate this visionary technology to the slideshows of conference power-points — until now.

Despite an ambitious grassroots campaign in the USA to promulgate awareness, much of the intrigue surrounding thorium has been engendered by the Chinese government. The ravenous Chinese industrial economy demands fuel, lots of it, so their government is frenetically sinking billions into exploring a diversity of conceptual energy sources. Their home-grown thorium research initiative has been expedited, with the aspiration to construct a 2MWt pilot plant (Thorium-Breeding Molten Salt Reactor - Liquid Fuel) by 2018, a 10MWt experimental reactor by 2025 and a 100MWt demonstration plant by 2035. 750 staff will be employed by the project by 2015 — which is a lot as research projects go — so it's fair to say there's no deficiency of enthusiasm for it. In nuclear-averse Norway the opportunity has proved too good to pass up, and private research is underway at the Halden Reactor Project. Having withheld its signature on the Treaty on the Non-proliferation of Nuclear Weapons, India has faced difficulty in importing uranium to fuel their current fleet of nuclear reactors, so aims to construct a Heavy Water Reactor capable of utilising their extensive domestic thorium reserves. It's reasonable to posit that the USA will eventually join in: forecasts reveal that domestic coal production will decline over the next decade, and LFTRs would be an intelligent substitute. So, the future of energy is at a crossroads: we either turn a blind eye to pioneering green nuclear technology and go it alone with renewable, or, we adopt a mixed, pragmatic approach, and permanently refashion mankind's relationship with the planet.

---------

[i] http://www.forbes.com/sites/kirksorensen/ [ii] http://www.ncpa.org/pub/ib149 [iii] http://www.world-nuclear.org/info/current-and-future-generation/thorium/ [iv] http://www.the-weinberg-foundation.org/wp-content/uploads/2013/06/Thorium-Fuelled-Molten-Salt-Reactors-Weinberg-Foundation.pdf [v] http://www2.hmc.edu/~evans/LamThorium.pdf [vi] http://thoriummsr.com/intro/pros-and-cons-list/ [vii] http://en.wikipedia.org/wiki/Thorium [viii] http://www2.hmc.edu/~evans/LamThorium.pdf [ix] http://www.eia.gov/countries/country-data.cfm [x] http://thedigitalfirehose.blogspot.co.uk/2013/09/why-are-we-using-uranium-instead-of.html [xi] http://en.wikipedia.org/wiki/List_of_companies_in_the_nuclear_sector [xii] http://www.bbc.co.uk/news/science-environment-15864806 [xiii] Pubs.GISS: Kharecha and Hansen 2013: Prevented mortality and greenhouse gas emissions from historical... (nasa.gov)

UK poverty is rising we're told: they're wrong

We're told today that poverty is rising in the UK. Apparently the baby eaters have decided to push into destitution yet ever more of the inhabitants of this sceptered isle. On the grounds, presumably, that they just hate poor people. This is not in fact true and this report doesn't show anything like that happening either:

Poverty in the UK is increasing after two years of heavy welfare cuts have helped to push hundreds of thousands of people below the breadline, according to an independent study of the coalition government’s record.

Although middle-earners saw incomes rise marginally after 2013, policies including the bedroom tax and below-inflation benefits rises have reduced incomes for the poorest, pitching an estimated 760,000 into poverty since the last official figures were produced, according to the New Policy Institute (NPI) thinktank.

The report itself can be found here. The reason the statement is incorrect is because they haven't looked at poverty at all. There is, by any historical or global standard of measurement, no poverty in the UK today. There is, of course, inequality, and this is what they are measuring. That number of people are, by their calculations, now getting under 60% of median income. That is, they are looking at relative poverty, not poverty.

Which is, of course, why inequality was renamed relative poverty (and the relative almost always immediately dropped) so that the terminally aggrieved would have something to complain about still. After all, how can you go on shouting about the horrors that capitalism afflicts on the poor when capitalism has abolished poverty?

Change the definition and carry on shouting, obviously.

Why we vote

It’s difficult to understand why people vote, let alone why they vote the way they vote. No individual can reasonably expect her vote to determine or even influence the outcome of an election. In America, the chance of a one-vote victory margin that would determine the 2008 presidential election was about 1 in 10 million in some swing states, and 1 in a billion in places like California or Texas.

As Sam Dumitriu notes, this might still make voting worthwhile if you’re an altruist and you expect one candidate to make the world better than the other by more than a few billion dollars. But most people don’t think like this, and that has led some people to assume that voting is “expressive” – people do it to signal their allegiance to a particular tribe or team, not because they think the party they are voting for is best for themselves or the country.

Truthfully telling people you have voted certainly does seem to be a reason for voting, although the study the Freakonomics guys cite is from Switzerland, where I’ve heard they’re much more concerned with neighbourliness and civic duty than, thankfully, we are in England.

But does expressive voting determine how we vote? If it tells us anything it must mean that people are supporting parties or policies that, on some level, they believe to be counterproductive. Certainly if many (or any) people who are planning to vote Labour secretly believe that the Tories are actually best for the country, this would be a mark in favour of the expressive view of things.

In The Myth of the Rational Voter, Bryan Caplan argues that this is unlikely – people rarely feel good about voting for policies or parties that they think are bad. Group loyalty may well be a factor in determining how people decide what’s good to vote for, but surely it rarely trumps what people think is good.

In fact, barely half of each party's voters during the current UK election say they're proud to vote for their party. That obviously includes 'expressive' voters and people who like their party because they think it's the best one on its non-identidy merits.

Another problem with this view is that it also assumes that people realise that their votes don’t matter, but when polled people vastly overestimate the power of a single vote – the median American estimates that “there is a 1 in 1000 chance that their vote could change the outcome of a Presidential election” – the reality is between one in 10 million and one in a billion, remember. Yougov finds that “the less likely you are to think your vote will actually matter, the more likely you are to vote.” (I’m guessing this is because you’re more highly educated.)

That supports the idea that people vote for reasons of civic duty primarily, and for some people because they think their vote will affect the outcome of the election. For many people, no doubt, it’s both.

All of this may help us to understand why people vote the way they vote: is it mostly self-interestedly, as many public choice economist believe, or altruistically, as most political scientists believe? I will try to answer that in my next post.

Here's one reason for slow growth: regulation

Perhaps we do want to drill for oil in the heartland of the Home Counties, perhaps we don't. That's rather a political question and probably one best solved by politics. Instead, we want to draw attention to one of the reasons why the richer countries tend to have lower growth rates:

It is understood that although UKOG, which is chaired by Mr Lenigas, and its partners have local planning permission and a licence for the site in Surrey they would still require formal approval from the newly established OGA before any flow testing operations- vital to the project’s commercial future - could begin.

UKOG, whose shares are traded on the London Stock Exchange’s junior Aim market, said in a statement to the stock exchange that planning permission to proceed at Horse Hill was in place and that it had “already submitted the applications to the authorities for their consent” to conduct a flow test of the well.

However, The Telegraph understands that no such application had been received by the Oil and Gas Authority as at the close of business today, Aoril 28.

A spokesman for Mr Lenigas – who is playing an active role in driving the scheme forward – said that the company stands by its original statement “which is entirely accurate”.

According to guidelines, a well test would require planning permission from the Mineral Planning Authority, environmental permits from the Environment Agency (EA), a review of well plans by the Health and Safety Executive and finally regulatory consent from the OGA.

This process could take months, which if so would potentially put the company’s plans to flow test Horse Hill this year under pressure.

Leave aside, entirely, the interesting financial background to this. Consider instead this regulatory thicket.

It's entirely possible that this is environmentally sound. That it really should take many months for the authorities to decide whether someone should be allowed to carry out a flow test. We find that hard to believe, given that well tests are a normal, routine, and well understood part of the process. But let that stand: there's still, obviously, a restriction of the growth rate of the economy when people trying to do new things meet such regulatory thickets.

If there must be regulation then it needs to be simple, obvious and above all fast. The current regime doesn't meet those tests: and this is a part of the explanation as to why growth rates are slow. We've allowed the necessity of a certain amount of bureaucratic licence gaining to become the equivalent of a barnacle encrusted hull on a ship. This reduces the speed through the water: time to haul the system out for a good careening.

Nepal’s quake exposes hidden problems and solutions

Caught in Nepal’s 7.9 Richter Scale quake that left 5,000 dead acknowledged so far, New York Times correspondent Donatella Lorch observed: “People here help one another because they know the government often cannot. They reach out to one another, and they persevere. They open their shops, because what else can one do when the world is upside down?” She’s right.

Avalanches, mud slides and antiquated buildings boosted rural casualties compared to downtown Kathmandu, which suffered less than expected apart from relatively few old monuments and newer substandard dwellings. But walls fell down everywhere, chiefly surrounding government buildings and army barracks. “That’s because politicians and bureaucrats demand huge kickbacks, leaving the contractors no choice but to cut corners on safety,” explained a builder. “The private sector usually gets it right.” Elsewhere I met groups of young entrepreneurs bemoaning officialdom under-equipped and paralysed for days. We can never rely on government again, they concluded.

In a campaign limited to fearful whispers, Nepal’s late 2013 elections surprisingly trounced the Maoists, who fell from first to a weak third place. Just one of the Maoist leaders reportedly stole one billion dollars; yet the ruling centre-right Congress Party is less corrupt but irredeemably feckless. Post-earthquake frustration won’t drain the political and bureaucratic swamp, but mounting public irritation may offer a remedy.

The Red Cross Federation took only a few days to fly Scandinavian field hospitals into India’s Gujarat State after a deadly quake in 2001, but when they arrived the private sector was already there. “National trade associations for jewellers, the dairy industry and others were working in unison, providing food and medicine to tens of thousands of their countrymen, much faster than even the NGOs. We were amazed,” a Red Cross expert recalled. “When government officials arrived a week later, and started ordering everyone about, the businessmen told them to get lost. Everything was already so well-run that the bureaucrats had no choice but to fall in and cooperate.” Watching, and soon to become Gujarat’s Chief Minister, was the free-market Narendra Modi, now India’s Prime Minister. 

Part of the former Hermit Kingdom’s problem has been mistaking First World wealth for governmental competence. But thriving banking, telephone and IT sectors bring savvy young Nepalis home from abroad, and with them comes a can-do attitude. Private sector self-reliance may be what the country needs.